US SBA Paycheck Protection ProgramApril 2, 2020
The U.S. Small Business Administration’s Paycheck Protection Program (PPP)
SBA Paycheck Protection Program Latest Updates
May 16: SBA issued the Loan Forgiveness Application that will be used by PPP borrowers to determine and report how much of their PPP loan will be forgiven. Read more about forgiveness application issues and answers.
May 14: Previous PPP guidance from the SBA left some businesses questioning whether they would have to repay their PPP loan by May 14, 2020. Through a frequently asked question (FAQ), the SBA has issued the following safe harbor and additional guidance about how they will review the good faith certification:
- The safe harbor provides that any borrower, who with their affiliates, that have received a PPP loan of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.
- Upon review, if the SBA makes a determination that a borrower with a loan greater than $2 million did not meet the certification on the necessity of the loan and the loan was not repaid by May 14, 2020:
- The SBA will seek repayment of the loan
- The SBA will inform the lender that the loan is not eligible for forgiveness
- If the borrower repays the loan after receiving notification of the determination from the SBA, the SBA will not pursue criminal or civil penalties
The above guidance should provide some comfort to borrowers that were evaluating whether the loan should be paid by May 14, 2020. However, for those borrowers with loans greater than $2 million it is still unknown what criteria the SBA will use to evaluate if the business made a good faith certification with respect to the necessity of the loan. Therefore, we continue to recommend that borrowers carefully review and document their financial situation to meet the certification that the loan was necessary to continue ongoing operations.
May 11: PPP had 40% of the funds available. Businesses in need are encouraged to reach out to their banker or financial institution to learn more about receiving funds.
April 27: PPP reopened for a second round with $321 billion to refuel the program. Of the $321 billion for the PPP, the majority is expected to go quickly, especially with all the unprocessed PPP loan applications in queue at banks across the country.
Throughout the application process, businesses indicated they experienced some initial challenges with applying. All participating financial institutions needed time to gear up to process loans and still need to comply with the Patriot Act and “Know Your Customer” regulations. Financial institutions of all sizes are having difficulty processing the sheer volume of loan applications while also ensuring they are complying with federal rules for the program that continue to undergo modifications.
- FAQ for SBA PPP: View answers to the most frequently asked questions on the SBA’s PPP, put together by the U.S. Chamber of Commerce.
- Learn more about the Michigan PPP: Lt. Gov. Garlin Gilchrist II and former Lt. Gov. Brian Calley teamed up to announce a coalition to support small businesses and improve access to federal loans.
This tool will help determine how much of your PPP loan will be forgiven.
What to Do If Your Bank Is Not Participating:
- Ask your existing bank for a referral.
- Reach out to your network, ask other business owners who their banking partner is, and get a direct introduction to their contact.
- Be patient, some banks are getting certified and others may be at capacity.
- Stay informed, reports indicate there is likely more federal aid coming for business.
- Be prepared and determine if you are eligible to start preparing an application.
View: US SBA PPP Webinar
The $350 billion program provides loan assistance to businesses with fewer than 500 employees affected by the COVID-19 crisis. The Chamber partnered with Dykema, Consumers Energy and TCF Bank to share the latest information about accessing the funds.
What You Can Do Now
Your existing banking partner should be in the best position to offer counsel. Note: Only SBA certified lenders will be qualified to participate in the Program at its launch.